You spend a lot of time preparing your home to get in the best possible condition just before your real estate agent lists your home for sale in the multiple listing service. Maybe a fresh coat of paint, some minor repairs or perhaps you updated the kitchen or the master bath. You do all of this in order to get top dollar for your home and hopefully sell your home within just a few weeks. Once the home is listed you will begin to get offers. And for whatever reason buyers seem to think that your list price is only the starting point and might present an offer for less than what you’re asking. Unless of course you’re in a super-hot market where homes listed for sale take just a few days to get an offer or even get an offer for more than your list price.
Typically though, you could go back and forth with a buyer or two when you both finally end up with an agreed upon price. The buyer presents the offer, you accept, both of you sign the sales contract and the buyer provides the settlement agent with an earnest money deposit. You have an offer and your home goes from “For Sale” to “Pending.” That means your home is taken off the market while the buyer obtains financing. But you notice afterward that the buyer is obtaining a VA loan. Doesn’t it take a long time for the VA to issue an approval? What if the buyer takes weeks to get to the VA and is ultimately declined, all the while your home was temporarily taken off the market with the signed contract.
What can you expect when your buyer is using a VA loan to buy and finance your property?
VA Approved Lenders
The first thing you should know is that VA lending is pretty much like any other loan type. The VA no longer approves loans or orders appraisals when a veteran uses a VA loan to buy a home. That practice stopped years ago. Granted, it used to be the case that VA loans took weeks or even a month or longer just to get the loan approved and out of the VA’s lending bureaucracy. Sellers then would shy away from an offer with VA financing because it took so long to get approved.
Today, you can expect a VA loan to be approved in as much time as it takes to close a conventional or FHA mortgage. The big difference is that lenders now apply for and receive authorization from the VA to approve mortgage loans without any assistance from the VA. That means you, the seller, won’t notice any difference at all because the buyer applies for a VA loan with an approved VA lender who has the authority to take the loan from start to finish without any outside interference.
The lender accepts the application, documents the file, orders the appraisal and issues the final approval. You won’t notice anything amiss.
VA loans are hands-down the best loan choice for an eligible borrower when a low or no money down loan is needed. Another benefit to the borrower is the limits placed upon the types of closing costs that the veteran is allowed to pay. VA eligible borrowers can pay certain charges such as origination fees, appraisals, credit reports, title insurance, recording and other specific loan costs.
There are fees however that will need to be covered that the veteran is not allowed to pay for. Attorney fees can’t be charged to the borrower nor can loan processing or underwriting fees among other so-called “non-allowable” closing costs. Those costs must be paid by someone and often the buyer asks you, the seller to pay for them. VA loans do allow for sellers to pay up to 4.00 percent of the sales price of the home toward buyer’s closing costs. As the seller, you’re certainly not obligated to pay any fees whatsoever and it’s up to you to say “yes” or “no.” But when you accept an offer with VA financing involved, don’t be surprised at the request. Sellers who do agree to pay some of the buyer’s closing costs often adjust the sales price of the home upward to offset the additional costs or otherwise hold firm on the list price. Other than closing costs, VA loans are like any other mortgage program.